Prime shareholders urge investigation

A group of shareholders in
Prime Retirement and Aged Care
Trust have called on the Australian Securities and Investments Commission to investigate the trust regarding their concerns about the way the company has been managed.

The move comes before a proposed restructure of the trust, under which its units would be stapled with units in newly formed Prime Retirement and Aged Care Management.

A representative of the company’s major shareholder has been in contact with ASIC, raising concerns that distributions have been paid out of unrealised profits, that deceptive and misleading statements were made in a 2007 product disclosure statement, and questioning the propriety of management fees charged by Australian Property Custodian Holdings, its current responsible entity, to Prime.

The shareholders behind the query want ASIC to look into the trust before any move to restructure the company, in case any grounds for legal action are discovered.

Prime managing director
Philip Powell
said Prime responded to an ASIC query in early January by providing the regulator with some documents. Prime had not heard back from ASIC, Mr Powell said.

A report circulated among shareholders and sent to ASIC said the price of units was less than 10¢, more than 90 per cent below their pre-listing price and 25 per cent lower than their net tangible asset value.

While the company’s financial situation was not unique in the property investment sector, given the impact of the global financial crisis on asset values, the economic situation alone could not be blamed for it, the report said.

The trust owns about 3600 independent living units on the east coast. Last month it announced plans to restructure, by undertaking a capital raising to buy the management rights to some of its facilities from Lend Lease.

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Shareholders are yet to approve the deal, which would involve the new company buying the shares in APCH.

Trust management says the change will result in higher cash flow.

Under the plan, the trust would become Prime Retirement and Aged Care Management.

Unit holders would receive shares in the new group. It will issue securities to back the purchase of the RV Management Rights from Lend Lease. The property giant has granted Prime Trust a call option permitting it to acquire the rights for $42.5 million to $45 million.

In their query to ASIC, shareholders questioned how the management rights were ever externalised.

An ASIC spokesman would not confirm whether a complaint had been made.